Wind Energy Property Easements – Tax Scams As Well As Property Rights Theft?

Friday, November 22nd, Michael and I welcomed John Baca – a real estate attorney from Hughes County, Oklahoma – to the podcast to talk about some things he’s been seeing with the influx of wind energy leases in the county.

During the course of the conversation, John told us that over 42,000 acres of land in Hughes county has been leased to wind developers by a relative handful of residents – most of whom are absentee land owners and don’t even reside on the land they’ve leased. This is a problem because those land owners won’t have to see the ravaged landscape that has become their property, or have to listen to the horrifying noise they make, or put up with the light flicker that could drive a person insane. (And read this WELL-RESEARCHED, horrifying article I just read on wind energy and whale deaths on the eastern seaboard. Why are we allowing these supposedly ‘green’ activities to ruin our planet? Are we really this stupid?)

Listen to John describe that problem in the clip below, where he also talks about the leases themselves – they’re over 70 pages long, they have non-disclosure agreements (NDA) which prevents lease signers from providing information about the lease to anyone without getting sued (gosh, that’s transparent) and the easements granted to the wind generation company sign your property away to whomever the company chooses until eternity and their language is incomprehensible to land owners who otherwise might have previously worked with an oil and gas company. Just. A. Bad. Deal. All. Around.

In the next clip, John gets to the bottom line – conservation easements and wind turbine leases are creating a situation in which land owners are unable to use the land for farming and we’re all becoming less able to manage our lives self-sufficiently while wind turbine companies – that already get MASSIVE taxpayer subsidies – use the system even more efficiently to collect more taxpayer dollars.

In further researching the concept of conservation easements, I found this really great article that gives the pro’s and con’s of the practice. Apparently President Trump applied for (and got) a conservation easement for Mara Lago, yet it’s easy to see how this particular tax-shelter would create a HUGE set of loopholes allowing bad actors to take advantage of other people’s property.

In fact, ProPublica (yes, this is a liberal organization, however, liberal organizations actually watchdog ‘conservative’ issues unlike conservatives – who generally tend to love everything labeled with an ‘R’ just because it’s labeled with an ‘R’) did a series of articles on conservation easement tax scams that is quite informative.

An article from 2022 called, “The Tax Scam That Won’t Die“, seems to describe the issue John believes wind turbine companies are using to their advantage. Here is the relevant paragraph:

“The syndicated versions are different (conservation easements). Instead of seeking to protect a bucolic reserve for wildlife or humans, profit-seeking intermediaries have turned the likes of abandoned golf courses or remote scrubland into high-return investment vehicles. These promoters snatch up vacant land that till then was worth little. Then they hire an appraiser willing to declare that it has huge, previously unrecognized development value — perhaps for luxury vacation homes or a solar farm — and thus is really worth many times its purchase price. The promoters sell stakes in the donation to individuals, who claim charitable deductions that are four or five times their investment. The promoters reap millions in fees.”

Last year, Congress apparently had found a way to crack down on conservation easement abuse:

“During a June 22 Senate Finance Committee markup on retirement legislation, Sen. Steve Daines, R-Mont., a longtime sponsor of the Integrity Act, identified the projected windfall from a clampdown on syndicated easements as a way to pay for a popular proposal enhancing benefits for disabled police, firefighters, paramedics and EMTs. That bipartisan legislation, months later, got added to the massive, must-pass government funding bill, where no single lawmaker had the power to strip it out.

A big concession sealed support for the deal: Daines and other backers agreed not to apply the law to transactions that date back to when the IRS flagged syndicated easements as abusive in 2016 (though the IRS can still pursue cases from back then). Instead the new limits apply only to transactions that occur after the law’s enactment. Along with a much smaller change exempting the measure from applying to historic buildings, this reduced the projected Treasury windfall to about $6.4 billion.”

This year, however, the US Tax Court “boldly declared the Treasury Regulation section 1.170A-14(g)(6)(ii) as invalid, citing non-compliance with the Administrative Procedure Act (APA) as the primary reason. This particular regulation had previously served as a cornerstone for the IRS in disallowing deductions claimed by taxpayers under the guise of conservation easements, imposing stringent conditions that required the easements to be perpetual.“

So, go figure – the government giveth, the government taketh away, then the government giveth it backeth. Phenomenal. Apparently, the taxpayer will continue to take it in the hind end until the practice is somehow done away with permanently.

In the meantime, neither this, nor Governor Stitt’s “more of everything” approach to Oklahoma energy, is helping regular land owners from getting screwed out of the pleasure of owning their own property (sorry, renting it from the government).

Again, contact your legislators about this issue too…